McRo decision expected to clarify abstract idea doctrine under Alice

To say that the Supreme Court’s Alice decision has shaken up the patent world is an understatement. While that much is fairly undisputed, what has confounded patent lawyers and courts alike is that Alice was short on actual guidance for deciphering the difficult question of whether a claim is directed to an abstract idea. Past articles have a highlighted these challenges faced by patent owners and practitioners.

A case currently pending before the Federal Circuit is anticipated to provide greater guidance into the answer to this question, namely, how district courts should determine whether a claim is directed to an abstract idea. The case, McRo, Inc. v. Bandai Namco Games America, No. 2015-1080, recently heard oral argument on December 11, 2015. The panel’s questioning indicated that its anticipated decision may provide greater insight into how district courts are to determine whether a claim is, in fact, directed to an abstract idea. As a result, the opinion may also loosen the noose of Alice a bit, and make it slightly more difficult for defendants to short-circuit patent litigations with early motions directed to ineligible subject matter.

McRo involved two tracks of consolidated cases against numerous video game developers. The plaintiff, McRo, Inc., d.b.a. Planet Blue, asserted two patents, U.S. Patent Nos. 6,307,576 and 6,611,278. The patents are directed to automatic three-dimensional lip-synchronization for animated characters. Whereas prior art lip-synchronization required manually synchronizing an animated character’s lips and facial expressions to specific phonemes, the patents are directed to rules for automating that process. Defendants moved for judgment on the pleadings on the grounds that the asserted ‘576 and ‘278 Patents were directed to ineligible subject matter under section 101. The Honorable George H. Wu, for the Central District of California, granted the motion.

In his opinion invalidating the patents as directed to ineligible subject matter, Judge Wu lamented the apparent lack of tangible guidance on the application of section 101. Recognizing that the Supreme Court has now endorsed section 101 as an important tool for protecting the role of patents as fostering follow-on innovation, he nevertheless observed that “District Courts and the Federal Circuit are now left with the task of figuring out when the ‘two-part’ test is satisfied.” (Slip Op. at 10). District Courts are often tasked with the chore of determining the contours of a broad principle enunciated by a higher court. But this case is noteworthy because, during oral argument before the Federal Circuit, the Court also expressed concern that it is not clear when a patent claim can decidedly be said to be directed to an abstract idea under step one of the two-part test.

At the district court, Defendants’ principal argument was that Planet Blue’s patents do nothing more than claim the application of “rules” for automatic 3D lip-synchronization, without specifying what those rules actually are. Judge Wu did not find that the claims, on their face, are directed to the abstract idea of using “rules” to automate lip-synchronization. Instead, he found the claims limited to automating lip-synchronization using specific inputs, including: 1) a timed phoneme sequence, 2) setting morph weight sets at certain key frames and 3) interpolating between keyframes. But those inputs already existed in the prior art. Yet, under the prior art method, the morph weight sets were manually set at certain keyframes. The patents simply claimed allegedly unspecified rules for setting those morph weight sets. Judge Wu stated, “A consideration of the prior art recited in the patents shows that the point of novelty here is the idea of using rules, including timing rules, to automate the process of generating keyframes.” (Slip Op. at 17). Thus, despite finding the claims are “tangible, each covering an approach to automated three-dimensional computer animation, which is a specific technological process,” (Slip Op. 13), Judge Wu nevertheless found the inventive feature of the claims was directed to an abstract idea. But this is only because he first stripped the claims of the “tangible” aspects already existing in the prior art.

Ineligibility, at least on its face, has little to do with novelty. Indeed, as Judge Wu rightly observed, Einstein’s celebrated reduction of relativity to the mathematical relation, E = mc², was an unquestionable stroke of genius, but no one would contend that section 101 would have sanctioned a patent for that.   (Slip Op. at 20). Yet, Judge Wu nevertheless concluded that the section 101 two-part-test must be performed within the context of the prior art. Because of this, he took the radical step of stripping the claim of its conventional elements before looking at it again and concluding that, adequately stripped, it is indeed directed to an abstract idea without “significantly more.”

Writers on this blog, among others, have observed that Judge Wu’s analysis is “not Mayo’s two part test.” During oral argument before the Federal Circuit, the panel also questioned whether Judge Wu erroneously injected a third step into the two-part test. The panel expressed this concern to both Plaintiff’s and Defendants’ counsel. The implication from the Court’s questioning was, by backing out conventional or prior art elements of the claim during step one, and focusing only on those elements within the claim that did not exist in the prior art, Judge Wu erred by only considering whether a portion of the claim was directed to an abstract idea, rather than considering the claim as a whole.

Interestingly, Judge Wu’s analysis was not without reason. He observed that patent claims often recite lots of old material with the addition of a single novel element. If that single novel element simply claims an abstract idea, then that exacerbates the precise concerns underlying section 101. Judge Wu appears to have suggested that patentees should not, in theory, be able to circumvent section 101 by reciting tangible, non-abstract prior art, and then merely tacking on a functional limitation as the point of novelty that preempts all tangible solutions that would satisfy that functional limitation. As Judge Wu states, “[a]n abstract idea is the extreme case of functional language.” (Slip Op. at 15). An example would presumably be a claim directed to an automobile, reciting all the tangible pieces and equipment built into that automobile, with a final step that recites, “wherein said processor contains rules for automating driving of said automobile.”

One thing is for sure—Judge Wu’s analysis raised the question of when, exactly, claims can be safely said to be directed to an abstract idea under step one of the two-part test. During oral argument before the Federal Circuit, the panel expressed concern over that very inquiry. One Judge asked whether district courts are to ask whether the “purpose” of the invention is abstract, or something else. The Judges further asked, assuming Judge Wu’s method for assessing whether the claims are directed to abstract ideas was incorrect, then what method should the district court have followed? The Federal Circuit’s questioning echoed some of the same laments by Judge Wu, namely that without tangible guidance on how to assess whether a claim is directed to an “abstract idea,” it may be more like Justice Stewart’s famous phrase, “I know it when I see it.” (Slip Op. at 8, quoting Jacobellis v. State of Ohio, 378 U.S. 184, 197 (1964) (Stewart, J. concurring)).

During oral argument, the Federal Circuit panel questioned Judge Wu’s analysis on another ground that may make it more difficult for district courts to “Alice”—especially early in a case—a patent in the future. The panel inquired whether the claims were not yet adequately construed to determine whether they were ineligible. Defendants argued that Planet Blue’s patents do nothing more than claim the application of “rules” for automatic 3D lip-synchronization, without specifying what those rules actually are. Without necessarily disagreeing with that, the Court asked if there exists a permissible claim construction that, if adopted, would delimit those rules sufficiently so that the claims could not be said to preempt all uses of rules for automatic lip-synchronization. While Judge Wu did construe the claims at the district court, the Federal Circuit panel nevertheless questioned whether a claim construction existed that could narrow the “rules” to be applied by the claims, suggesting Judge Wu’s decision may, at the very least, require remand.

Overall, the Federal Circuit is likely to issue additional guidance on how district courts are to determine the first-step—whether the claim is directed to an abstract idea. The panel’s questioning suggests two broad principles may emerge. First, the first step of section 101 analysis must consider the claim as a whole. Claims should not be stripped of conventional elements before deciding whether they are directed to an abstract idea. The result of this will likely narrow the field of patents that are subject to invalidation under Alice, especially claims that recite tangible conventional structure coupled with inventive elements that can be characterized as purely functional.

Second, district courts may be admonished to determine whether any possible claim constructions exist that would adequately limit the claims so they cannot preempt all solutions to a functional claim element. While avoiding a bright-line rule that claim construction must precede a motion under Alice, district courts might be reminded that proper claim construction must take into consideration whether the claims can be sufficiently delimited to no longer preempt an abstract idea. Interestingly, claim construction in the context of an Alice decision could put a plaintiff and defendants at odds with their own infringement and invalidity arguments.